6 Types of Crypto Crimes & How to Mitigate Them

Cryptocurrency or virtual currency is gaining fame from the last few years all across the globe. From the finance sector to gaming sites, people are seen taking a keen interest in this new technology. Hackers have stolen around 1million bitcoins from different exchanges. On the flip side, it has significantly influenced the cybercriminals to keep executing their criminal activities without the fear of getting caught. The reason is that cryptocurrency has become a secure and trusted form of money giving advantage edge to criminals and money launderers keeping their identity anonymous. There is still a high risk of scams in these sectors but these cases can be tackled beforehand by deploying digital identity verification solutions that play a great role in mitigating the risk of frauds.

Cryptocurrency Business & Related Scams:

Cryptocurrency business needs to be abiding by the laws regarding KYC and AML as per regulatory authorities. Cybercriminals are using this platform to carry on many fraudulent activities so to fight them back digital identity verification solutions are needed.

• Empowering the Terrorists:

Just like any other criminals, terrorists also find the cryptocurrency the safest means of raising funds for their activities and making the financial statements online without intervening in any agency or fear of being caught. Keeping the identity anonymous can be a problem for virtual currency working. $5.2 billion were reported to be laundered in Europe in the year 2018.

• AML Compliance and Cryptocurrency:

Cryptocurrency is a center of attention for money launderers and cybercriminals due to its anonymity of end-users. Crypto scams can be prevented by using digital authentication tools.

The organizations lacking proper channels for authentication will have to pay hefty fines for negligence and violation as per strict regulations. In order to gauge the legitimacy of cryptos using AML checks can be used to authenticate users. To meet the GDPR compliance there is a dire need for real-time AML measures for the organizations. Money laundering has become really easy by carrying millions of dollars across borders with this globalized world without getting caught through digital currencies. It is becoming a haven for criminals to use crypto for their scams as cryptocurrency does not require any identification authentication.

• Fake ICOs:

Such Initial Coin Offerings(ICOs) are dumped right after they have attracted enough of the investments. This is the most prevalent fraud. Such types of coins so not offer any kind of utility but a lot of promises come along.

• Phone Porting:

In this case, the scammer steals the identity of the victim and use it to call the phone service provider to transfer the number to another provider. They log the victim out of all his accounts. Even when the victim tries to reset passwords the verification codes will not reach his phone.

• Online Wallets or Centralised Exchange

When investors store cryptocurrencies in an online wallet, it can be an easy target for hackers. Quite sophisticatedly this treasure can be hacked. Cryptocurrency exchanges are vulnerable to such lethal attacks.

• Dark Exchanges:

Plenty of shady exchanges are rooting in so which cryptocurrency exchange to trust? A large number of cryptocurrency exchanges do not even uphold KYC and AML compliance and may out up an online presence that looks credible on the surface only to steal money from investors.

Digital Identity Verification-Solving the Equation for Scams:

Cryptocurrency has a great market potential not for individuals but for businesses as well; crypto platforms should be regulated properly by the government agencies for stopping the cybercriminals and money launderers. But currently, it is proving to be a bliss for criminals as the organizations have failed to comply with anti-money laundering laws and regulations. This has drastically affected its market value. The cryptos will have to face strict legal penalties in case of law infringement.

Effect of KYC and AML on Cryptocurrency:

With secure transactions, the crypto world will be a much better place. KYC and AML checks will limit the number of frauds and prevent huge losses and hefty fines. Crypto crimes can be lessened only if the identity of investors for ICOs and users at the cryptocurrency exchange is properly verified using good channels. For KYC complete information must be exchanged properly and verified thoroughly against their original state-issued ID document.